$50m-$100m Mainzeal loss tipped

Subcontractor says group class action to get money back could be worthwhile but he would need more details.

The financial standing of Mainzeal is still being assessed by the receivers. Photo / Brett Phibbs

An out-of-pocket Mainzeal Property and Construction subcontractor estimates the builder could record $50 million to $100 million of losses and says a group class action to get money back could be worthwhile - but only if it stands a good chance of success.

Phil McConchie, co-owner of scaffolding and propping business Camelspace, which had $1 million of gear on the twin-tower leaky Hobson Gardens' site, predicted Mainzeal accounts would reveal huge losses and this would have widespread repercussions for his sector.

"My guess is $50 million to $100 million because I've lost $300,000, another company is owed $500,000, another Wellington company $100,000 and I estimate another scaffolding company is owed $500,000. That's well over $1 million and those are just some of the people [mainly] in Auckland," he said referring to around 40 sites where the builder was active throughout New Zealand.

Receivers PwC have not given any estimates yet but could present an initial Mainzeal report by the end of this month and are still auditing sites.

Even its first report could be scant on financial details of the complex business - New Zealand's third-largest builder after Fletcher and Hawkins.

McConchie said he might be keen to talk to other subbies about taking legal steps to get money back but would need to know more.

"There would have to be a point to it, not just getting involved in proceedings. I don't want to throw bad money after good," he said.

He predicted a big group of subcontractors could fail in the next month, causing widespread damage to the building sector, vital to Christchurch's reconstruction and to Auckland which desperately needs thousands of new residences.

He also questioned the role of ex-director Jenny Shipley, saying she had duties to perform in her role with Mainzeal. Bill Ralston, Shipley's spokesperson, said yesterday she was not speaking about Mainzeal.

McConchie said the repercussions of Mainzeal's fall for the multi-billion-dollar building sector were significant. But he predicted new businesses might rise and margins could improve, providing better and more secure income to many sub-trades.

"I think it's going to have a big effect," he said.

But he hit back at comments from NZ Strong's Shane Brealey that Mainzeal subbies were too slack and had let bills mount up, saying although payments to Camelspace were outstanding for 38 days, this was not uncommon in the construction sector.

"We weren't too lenient. Of the $300,000, $70,000 were retentions," he said, referring to the system whereby Mainzeal would retain 10 per cent of each payment to secure itself against the failure of a subcontractor or a problem on the job.

Christchurch plumber Peter Diver wants subbies to boycott and picket Mainzeal sites where jobs are taken over by other companies who do not pay the existing claims.

About 1000 subcontractors are thought to have been working for Mainzeal.

Engineering and contracting firm Aquaheat is owed money on a number of contracts with Mainzeal and Rob Tait, chairman of parent Horizon Energy, said the impact of the receivership was being assessed by Aquaheat's management.

Experienced liquidator and receiver Steve Lawrence of PKF Corporate Recovery & Insolvency (Auckland) said subcontractors suffering from Mainzeal's fall should get legal and financial advice if they were struggling financially.

Receivership or liquidation were not the only options and they might consider a creditors' compromise, scheme of arrangement with creditors or voluntary administration as alternatives, he said.

Receiver Colin McCloy from PwC said the financial standing of Mainzeal was still being assessed, "so it is far too early to speculate on the final outcome of the receivership".